Conversations In Climate Tech: A Critical Reflection on The Hydrogen Megatrend

Date: March 6, 2025

Co-hosted by: Energy Revolution Ventures and Aramco Ventures

Venue: Prosemino Labs, Paper Yard, Canada Water

Panelists:

– Mark Selby, Chief Growth Officer, Ceres Power

– Michael Whiteley, Global Head of Hydrogen, HSBC

– David Hart, Partner & Global Hydrogen Lead, ERM

– Nick van Dijk, CEO & Co-founder, Oort Energy

– Marcus Clover (Moderator), Partner and Co-founder, ERV

Executive summary:

• Hydrogen is gaining critical traction and building on established markets such as ammonia and fertilizer production, while expanding into emerging sectors like green steel and sustainable aviation fuel where it is essential to industrial decarbonization.
• Cost parity with grey hydrogen is achievable, but there is now a clearer understanding that this is most realistic through regional approaches—particularly in areas with abundant, low-cost renewable energy such as Southern Europe, MENA, and parts of Africa.
• National industrial strategies are proving decisive, with countries like Japan, Korea, and Taiwan successfully aligning hydrogen development with broader economic and energy goals.
• Strong early markets like sustainable aviation fuel (SAF) are demonstrating that regulatory clarity and demand-side commitments can unlock commercial-scale hydrogen deployment.
• Hydrogen’s role as a long-duration energy storage solution positions it as a strategic asset in future energy systems, particularly for seasonal balancing and grid resilience.

Summary of the Panel Discussion:

This inaugural session of “Conversations in Climate Tech” offered a candid and insight-rich reflection on the state of hydrogen within the energy transition. The discussion focused on the realities of scaling hydrogen, evolving investment sentiment, and sector-specific progress across global markets.

Initial enthusiasm for hydrogen led to a wave of project announcements, but few reached final investment decision (FID). This shift from optimism to realism has brought sharper attention to financing bottlenecks, deployment challenges, and supply chain readiness. These adjustments are steering the industry toward more viable, strategically grounded projects.

Hydrogen remains critical for decarbonizing sectors where electrification alone falls short—such as steel manufacturing, aviation fuel, ammonia production, and chemical processes. In particular, green steel is gaining momentum due to the willingness of automakers to absorb modest green premiums. For high-value products like vehicles, the relative cost of green steel is small and increasingly seen as justifiable, creating commercial pathways for early adoption.

Economically, green hydrogen reaches cost competitiveness with grey hydrogen (around $2/kg) when produced at scale—typically 100MW and above—and directly integrated with low-cost renewable energy sources. Regions with high solar and wind availability, such as Southern Europe, the Middle East, and North Africa, are best positioned to achieve this parity through direct, behind-the-meter models and high capacity factors.

National industrial strategy emerged as a decisive factor for hydrogen success. Countries with coherent strategies—such as Japan, Taiwan, and Korea—are aligning economic growth, energy security, and supply chain development around hydrogen. These approaches reduce reliance on volatile global markets and foster local value creation. In contrast, fragmented or short-term policy frameworks risk undercutting the sector’s potential and delaying progress.

Application-specific economics also vary significantly. Sustainable aviation fuels (SAF), supported by clear regulatory mandates and financial penalties for non-compliance, represent one of the most viable near-term markets. Conversely, commodity sectors like fertilizer require phased approaches, such as incorporating green hydrogen at modest levels (e.g., 5%) to mitigate cost shocks while building operational experience.

The potential of white hydrogen—naturally occurring geological hydrogen—was noted as a promising but still uncertain area. Although it offers prospects for ultra-low-cost production, questions remain around scalability, purity, and compatibility with existing infrastructure. Continued exploration and investment are warranted.

Regional policy dynamics are shaping investment flows and industrial capacity. The UK’s limited participation in EU Hydrogen Bank auctions and lack of enforceable local content policies were identified as missed opportunities to build domestic manufacturing strength. While mechanisms like Contracts for Difference (CFDs) can manage market risk, they must be complemented by targeted industrial strategies to stimulate job creation and technological leadership.

In transportation, hydrogen is expected to play a selective but important role—particularly in sectors like heavy-duty vehicles and maritime shipping. Reliability of fueling infrastructure remains a limiting factor, especially for public transit systems. For residential heating, hydrogen was considered a lower priority due to inefficiencies and higher costs. However, hydrogen’s strategic value for long-duration energy storage stands out—particularly for seasonal or backup applications where other technologies fall short.

The overarching message was clear: hydrogen must be viewed not as a standalone solution but as a component of a broader, integrated industrial ecosystem. Successful deployment requires supportive infrastructure, thoughtful policy alignment, and cross-sector collaboration to maximize its impact and efficiency.

Despite market turbulence and slower-than-expected progress, hydrogen remains a vital tool in the global decarbonization toolkit. Pragmatic investment, regionally tailored strategies, and a long-term view rooted in real economics will determine its future role and impact.